Osmosis, the largest decentralized exchange in the Cosmos ecosystem, has announced a major update to its tokenomics model, OSMO 2.0, which includes a significant reduction in its inflation rate. Following a community governance vote, the platform has cut its inflation rate by 50%, signifying a transition from its early token distribution phase and its commitment to ensuring the long-term sustainability of the native $OSMO tokens.
The Osmosis team commented on the measure, saying that it allows the platform to strike a balance between growth and stability, ensuring a smoother distribution of tokens over time. The new inflation rate of OSMO will be approximately 11% after the reduction.
Osmosis is the main decentralized exchange of the Cosmos ecosystem, where trading is conducted with native tokens including $ATOM and bridged tokens such as Axelar wrapped BTC, ETH, and USDC stablecoin. The platform holds over $124 million in crypto assets, according to DeFiLlama.
Into the Cosmos - The Most Vibrant Ecosystem outside of Ethereum
The Osmosis team is also exploring the introduction of a protocol revenue burn mechanism, which could further offset the remaining inflation, leading to a net deflationary model. In addition, Osmosis governance is now discussing the implementation of a fee switch for liquidity pools. This feature empowers OSMO stakers by allowing them to directly share in the swap fees generated by activity in Osmosis liquidity pools, providing OSMO stakers with a direct share in the swap fees generated by activity in Osmosis liquidity pools.
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